May 22, 2008, Introduced by Rep. Farrah and referred to the Committee on Regulatory Reform.
A bill to amend 1998 PA 57, entitled
"An act to require contractors to provide certain notices to
governmental entities concerning improvements on real property; to
allow for the modification of contracts for improvement to real
property; to provide for remedies; and to repeal acts and parts of
acts,"
by amending sections 1, 2, 3, 4, and 5 (MCL 125.1591, 125.1592,
125.1593, 125.1594, and 125.1595).
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. As used in this act:
(a) "Construction manager" means an individual, sole
proprietorship, partnership, corporation, limited liability
company, joint venture, or other legal entity, that, pursuant to an
engagement by a governmental entity and acting primarily in an
administrative or managerial capacity, procures and enters into 1
or more contracts for the construction, alteration, demolition, or
repair of an improvement.
(b) (a)
"Contractor" means a
person who contracts with a
governmental entity or construction manager to improve real
property. or
perform or manage construction services. Contractor
does not include a person licensed as an architect, professional
engineer, or professional surveyor under article 20 of the
occupational code, 1980 PA 299, MCL 339.2001 to 339.2014.
(c) (b)
"Governmental entity"
means the state, a county, city,
township, village, public educational institution, or any political
subdivision thereof.
(d) (c)
"Improve" means to build,
alter, repair, or demolish
an improvement upon, connected with, or beneath the surface of any
real property, to excavate, clear, grade, fill, or landscape any
real property, to construct driveways and roadways, or to perform
labor upon improvements.
(e) (d)
"Improvement" includes,
but is not limited to, all or
any part of any building, structure, erection, alteration,
demolition, excavation, clearing, grading, filling, landscaping,
trees, shrubbery, driveways, and roadways on real property, that is
paid by public funds or by special assessment.
(f) (e)
"Person" means an
individual, corporation,
partnership, association, limited liability company, governmental
entity, or any other legal entity.
(g) (f)
"Real property" means the
real estate that is
improved, including, but not limited to, lands, leaseholds,
tenements, hereditaments, and improvements placed on the real
property.
Sec. 2. A contract between a contractor and a governmental
entity or a construction manager acting for or on behalf of a
governmental entity for an improvement that exceeds $75,000.00
shall contain all of the following provisions:
(a) That if a contractor discovers 1 or both of the following
physical conditions of the surface or subsurface at the improvement
site, before disturbing the physical condition, the contractor
shall promptly notify the governmental entity or construction
manager of the physical condition in writing:
(i) A subsurface or a latent physical condition at the site is
differing materially from those indicated in the improvement
contract.
(ii) An unknown physical condition at the site is of an unusual
nature differing materially from those ordinarily encountered and
generally recognized as inhering in work of the character provided
for in the improvement contract.
(b) That if the governmental entity or construction manager
receives a notice under subdivision (a), the governmental entity
shall promptly investigate the physical condition.
(c) That if the governmental entity determines that the
physical conditions do materially differ and will cause an increase
or decrease in costs or additional time needed to perform the
contract, the governmental entity's determination shall be made in
writing and an equitable adjustment shall be made to the
contractor's
price and time for the improvement and the
its
contract modified in writing accordingly.
(d) That the contractor cannot make a claim for additional
costs or time because of a physical condition unless the contractor
has complied with the notice requirements of subdivision (a). The
governmental entity or construction manager may extend the time
required for notice under subdivision (a).
(e) That the improvement contract shall be considered to
include information representing, depicting, describing, or
concerning physical conditions present on, in, or under the site of
the proposed improvement, or information from which such conditions
can be reasonably derived, which the governmental entity,
construction manager, or its representative provided or offered for
inspection to the bidders prior to the submission of bids,
notwithstanding any disclaimer or disavowal of such information
elsewhere in the improvement contract.
(f) (e)
That the contractor cannot make a
claim for an
adjustment under the contract after the contractor has received the
final payment under the contract.
Sec.
3. (1) If the contractor does not agree with the
governmental
entity's determination, with the governmental entity's
consent
the contractor may complete performance on the contract.
(2)
At In lieu of litigation in a
court of competent
jurisdiction and at the option of the governmental entity, the
construction manager, or the contractor, the contractor and the
governmental entity or construction manager shall arbitrate the
contractor's entitlement to recover the actual increase in contract
time and costs incurred because of the physical condition of the
improvement site. The arbitration shall be conducted in accordance
with
the rules of the American arbitration association
association's construction industry arbitration rules and mediation
procedures,
and judgment the decision rendered may be entered in
any court having jurisdiction over the matter.
Sec. 4. (1) If an improvement contract does not contain the
provisions required under section 2, the provisions shall be
incorporated into and considered part of the improvement contract.
(2) Any provision contained in the improvement contract that
purports to waive, release, or extinguish the rights of a
contractor to recover costs or damages for unreasonable delay in
performing the improvement contract, either on his or her behalf or
on behalf of his or her subcontractor, if and to the extent the
delay is caused by the acts or omissions of the governmental entity
or construction manager, its agents, or employees and due to causes
within their control, shall be void and unenforceable as against
public policy.
Sec. 5. This act does not limit the rights or remedies
otherwise available to a contractor or the governmental entity or
construction manager under any other law or statute.
Enacting section 1. (1) This amendatory act takes effect
January 1, 2009.
(2) This amendatory act applies to any contracts entered into
on or after January 1, 2009.
Enacting section 2. This amendatory act does not take effect
unless all of the following bills of the 94th Legislature are
enacted into law:
(a) Senate Bill No.____ or House Bill No. 6176(request no.
04828'07).
(b) Senate Bill No.____ or House Bill No. 6175(request no.
04829'07).
(c) Senate Bill No.____ or House Bill No. 6173(request no.
04831'07).